Mainland government 'building stake' in HK stock exchange
The central government may be building a stake in Hong Kong Exchanges and Clearing, helping to fuel the rapid rise of the stock-market operator's share price, a British newspaper reported.
The mainland's new foreign exchange reserve fund, which will manage US$200 billion, or the National Social Security Fund, which manages US$53 billion, could be buying shares, the Times of London said, citing sources close to the exchange.
HKEx shares have soared 122 per cent since August 17, when the Hang Seng Index hit bottom amid fears of a meltdown in financial markets in the wake of the subprime crisis.
The Hang Seng Index has risen 30 per cent over the same period.
HKEx, which operates Asia's third-largest stock market, said in a statement that it had no explanation for the rise in its share price.
'Five or six years in the future, Shanghai and Hong Kong will have more co-operation and eventually there will be an opportunity to merge in some way or another. So if the central government has a stake, it will be much easier for them to effect change,' said Tung Tai securities associate director Kenny Tang Sing-hing.
The Hong Kong government recently increased its holding in the exchange, revealing on September 8 that it held a 5.88 per cent stake. A day earlier, it had bought HKEx shares worth HK$2.4 billion at an average price of HK$155.40 per share to take its stake above 5 per cent.
Financial Secretary John Tsang Chun-wah said the stake, acquired gradually over the past few years through the Exchange Fund, would help maintain Hong Kong as an international financial centre.
HKEx chairman Ronald Arculli said this month that Hong Kong and the mainland should develop a single trading and listing platform.
The exchange issued a strategy for developing closer links with the mainland earlier this year, in which it outlined plans to 'establish a platform for cross-trading of securities' and to 'establish strategic linkages between the exchanges of Hong Kong and the mainland'.
Mr Tsang, Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong and Financial Services and the Treasury Bureau Secretary Chan Ka-keung met Beijing officials last month and set up a group to investigate closer market ties.
The combined market turnover of Hong Kong, Shanghai and Shenzhen reached US$1.03 trillion in the first seven months of the year, the eighth highest in the world, according to the World Federation of Exchanges.
